• The Indian stock market is bracing for a volatile week due to several influencing factors.
• Last week saw a sharp decline across all sectors, with the Nifty 50 and Sensex dropping by 2.71% and 2.24% respectively.
• Foreign Institutional Investors (FIIs) have recorded significant outflows, while domestic institutional investors (DIIs) have purchased equities.
• The market's direction will be determined by FII flows, earnings outcomes, and the global geopolitical landscape.

The Indian stock market is gearing up for a potentially tumultuous week, with several key factors set to influence its direction. Market experts have identified the next set of Q2FY25 results, FII activities, geopolitical tensions, US Presidential election polls, and global and domestic macroeconomic data as the primary determinants of market trends in the coming week.

Last week, the market experienced a sharp decline across all sectors. The Nifty 50 ended the week with a 2.71% drop at 24,180, while the Sensex was down 2.24% at 79,402. This downturn was attributed to profit booking by foreign and retail investors, muted earnings, a tepid demand environment, margin pressure, and softer guidance by many companies.

Foreign Institutional Investors (FIIs) have recorded significant outflows of around Rs 1 lakh crore so far in October. In contrast, domestic institutional investors (DIIs) have purchased equities worth approximately Rs 97,000 crore. This dynamic between FIIs and DIIs will be a crucial factor in the market's direction in the coming week.

Market Predictions and Key Players

Santosh Meena, Head of Research at Swastika Investmart, noted that the NSE benchmark has broken down from a major head-and-shoulders pattern, increasing the likelihood of a test at its 200-day moving average (DMA) level, which is around 23,400. He identified 24,000-23,900 as the support level, while 24,600-24,700 remains a resistance zone, with 25,000 as a significant hurdle on the upside.

Palka Arora Chopra, Director of Master Capital Services, highlighted the Bank Nifty's decline of over 7.5% from its all-time highs and a 2.51% drop this week, closing below the 51,100 mark and the 21-week EMA. This decline was triggered by disappointing September quarter results from Kotak Bank, AU Bank, and IndusInd Bank. Chopra identified 50,200 as the immediate support for Bank Nifty, warning that breaking this level could extend the decline to 49,600.

The market's direction largely depends on FII flows, earnings outcomes, and the global geopolitical landscape, according to Chopra. The geopolitical developments, particularly the Iran-Israel situation, will be closely monitored for their potential impact on crude oil prices. Markets worldwide may adopt a cautious wait-and-watch stance ahead of the US presidential election.

Global Factors and Market Trends

The Indian stock market faced several challenges throughout October, with bears tightening their grip on D-Street amid weak global cues and rising volatility. Foreign outflows have dragged the index down for the last 19 sessions as investors direct funds to China on Beijing's stimulus measures and cheaper valuations. The India VIX volatility index jumped over seven per cent to reach 15 on Friday and settled at 14.6 (+4.7 per cent). The market is set for its worst month since March 2020, when the COVID-19-led lockdown was enforced.

The broader indices too witnessed a similar trend as smallcap gained nearly a per cent while midcap closed flat. Metal stocks rose 2.90 per cent and were the top weekly sectoral gainer by percentage. Pharma stocks dropped 1.94 per cent this week, hurt by a 4.29 per cent drop in Sun Pharma following an order by the US drug regulator related to the company's Dadra facility.

Global market ended the week on a negative note as higher-than-expected US retail inflation for March has delayed expectations of the Fed interest rate cuts to beyond June. The US consumer price index (CPI) rose 0.4 per cent month-on-month and 3.5 per cent year-on-year, accelerating from 3.2 per cent in February.